The Influence of Aid for Trade on Human Development in South Asia

Although South Asia has made some progress in human development over the last century, it still lags behind some other Asian countries. It is necessary to explore the factors that contribute to human development but have not yet been explored. Thus, the aim of this study is to explore the influence of aid for trade on human development in South Asia for the period 2005 to 2019. First, the study detected the unit root problem in the data using panel unit root tests and found that all data series (human development, aid for trade, population and remittances) are stationary at the level except foreign direct investment, which is stationary at the first difference. Second, the pooled mean group-autoregressive distributed lag (PMG-ARDL) model was employed to examine the short- and long-term influence of aid for trade on human development. The findings of the PMG-ARDL approach explored that aid for trade has a positive and significant influence on human development, both in the short and long run. Finally, this study prescribed some policy suggestions to improve human development in the region.